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Herbert Smith Freehills advises on the market-first project financing of Melbourne’s $A11.1 billion North East Link PPP

01 November 2021 | Australia, Asia Pacific
Deals and cases


Herbert Smith Freehills has advised the financiers to the largest Public Private Partnership (PPP) in Australia, and the first PPP in the market to feature Alliance contracting principles – the A$11.1 billion North East Link PPP in Victoria.

The North East Link PPP is the largest package of works in the North East Link Program, the biggest transport project undertaken to date in Victoria. It completes the ring road around Melbourne that connects the Metropolitan ring road (M80) and Eastern Freeway (M3).

The PPP component features twin three-lane tunnels, of approximately six and a half kilometres in length, associated tunnel systems, intelligent transport systems, tolling infrastructure, and associated infrastructure.

In a climate of changing risk appetite in the market, the ITC (Incentivised Target Cost) PPP model has long been mooted as one that could provide a more balanced approach to risk allocation. This is the first model of this nature brought to market and successfully banked. The transaction has also featured a ground-breaking financing structure incorporating elements of bank and institutional debt in a truly global financier group.

Herbert Smith Freehills project finance partner Miles Wadley led a multi-disciplinary team on the transaction together with projects partner Erin Wyeth. Rounding out the Herbert Smith Freehills team were lead senior associates Nadine Kilpatrick and Joseph Varghese, supported by senior associates Jennifer Brightling and Tessa Spence and solicitors Luke Kavanagh, Jana Mavroidakos and Andrew Evans.

Miles Wadley said, “The North East Link PPP is a market-changing transaction. The bankability of an ITC PPP model has long been hypothesised but never realised, until now. We are proud to be at the forefront of shaping the market in this way. We know of other projects in the pipeline that are following suit.

“We congratulate the Spark Consortium, including Capella Capital, John Laing, WeBuild, GS Engineering and Construction, CPB Contractors, China Construction Oceania, Ventia, DIF and Pacific Partnerships and their financiers on another transformational transaction.”

This deal is another example of Herbert Smith Freehills’ market-leading work in the infrastructure and transport sectors.

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